STAR BUSINESS REPORT

Bangladesh’s economy is projected to grow around 5 percent in 2026, supported by easing inflation and strong remittance inflows that are expected to help households despite structural challenges, according to the Mastercard Economics Institute (MEI) 2026 Outlook released yesterday.

Inflation stood at 8.29 percent in November, up slightly from 8.17 percent in October but lower than November of the previous year, which recorded 11.38 percent, according to data from the Bangladesh Bureau of Statistics.

Remittance inflows rose 31.34 percent year-on-year to $2.88 billion in November, the highest in six months.

The MEI report said South Asia continues to show solid momentum. India is forecast to expand 6.6 percent, driven by domestic demand, monetary easing, and growth in digital and services sectors.

Sri Lanka is expected to grow 3.7 percent as private consumption, rising tourism receipts, and accommodative monetary policy sustain its recovery.

Bangladesh’s 5 percent projection places it between these two regional peers.

Growth in Southeast Asia will diverge, with Indonesia and the Philippines leading at 5 and 5.6 percent, respectively.

Malaysia and Singapore are expected to normalise at 4.2 and 2.2 percent, while Thailand lags at 1.8 percent amid energy and demand risks.

The MEI highlighted three defining forces shaping 2026: trade shakeup, AI and policy, and travel trends.

Global trade continues to reorganise following tariff shifts in 2025. The Chinese mainland has diversified exports to new corridors, while the US share of Chinese e-commerce sales fell from 28 percent in 2024 to 24 percent by August 2025.

For the Asia-Pacific region, this brings both risks and opportunities. Markets importing more low-cost goods from China are seeing disinflation, while exporters in Japan and South Asia face pressure from US tariffs and softer demand.

AI adoption and fiscal support are expected to provide meaningful tailwinds. MEI’s AI Spending Index shows strong momentum in South Korea, Japan, India, and Hong Kong.

Policies on AI hubs, data centres, smart cities, and semiconductors are laying the foundation for the next phase of digitisation.

Travel remains one of Asia-Pacific’s most resilient drivers. In the first half of 2025, Singapore’s outbound spend was $2.7 billion higher than in 2019, while Indonesia and the Philippines led regional growth with outbound travel spending up 40 percent and 28 percent, respectively.